Determinants of Escalating Costs in Low Risk Workers??? Compensation Claims

Division of Occupational and Environmental Medicine, Johns Hopkins University, School of Medicine, Baltimore, Maryland 21287-1629, USA.
Journal of Occupational and Environmental Medicine (Impact Factor: 1.63). 08/2007; 49(7):780-90. DOI: 10.1097/JOM.0b013e318095a471
Source: PubMed


To identify and quantify attributes that lead to unanticipated cost escalation in workers' compensation claims.
We constructed four claim categories: low initial reserve/low cost, migrated catastrophic (low initial reserve/high cost), high initial reserve/low cost, and catastrophic (high initial reserve/high cost). To assess the attributes associated with the increased cost of migrated catastrophic claims, we analyzed 36,329 Louisiana workers' compensation claims in the four categories over a 5-year period.
In the 729 claims initially thought to be low-cost claims (migrated catastrophic), the most significant predictors for cost escalation were attorney involvement and claim duration, followed by low back disorder, married/single/divorced status, male gender, small company size, high premium, reporting delays, and older age. These injuries accounted for 2% of all claims but 32.3% of the costs. Accelerated escalation of costs occurred late in the claim cycle (2 years).
Certain attributes, particularly attorney involvement and claim duration, are associated with unanticipated cost escalation in a small number of claims that drastically affect overall losses. The results of this study suggest that these cases may be identified and addressed before rapid escalation occurs.

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Available from: Xuguang Grant Tao, Mar 24, 2014
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